Short-term rental reforms appear at play at Arizona Legislature

Joint ad hoc committee has appetite for change

Posted 12/30/19

Potential reform of short-term rentals seems nearly inevitable, one elected leader says, as residents and officials around Arizona vented further issues at a second bipartisan meeting at the Arizona …

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Short-term rental reforms appear at play at Arizona Legislature

Joint ad hoc committee has appetite for change

Posted

Potential reform of short-term rentals seems nearly inevitable, one elected leader says, as residents and officials around Arizona vented further issues at a second bipartisan meeting at the Arizona capitol on the overnight accommodation option.

Furthermore, Scottsdale Mayor Jim Lane testified in front of the joint ad hoc committee for short-term rentals in December, pointing to a concern of how commercial enterprises renting out single-family homes for tourists could potentially change the entire complexion of neighborhoods.

The joint ad hoc committee comprised of six Arizona representatives and senators hosted the second of three meetings to analyze the impact of short-term rentals on local neighborhoods. The first meeting, held in October, was limited to discussing the issue of “nuisance” created by the temporary rentals.

Co-chaired by Sen. Kate Brophy McGee and Rep. John Kavanagh, the second meeting focused on taxation and clustering, held at the Arizona Capitol, 1700 W. Washington Ave.

Arizona Senate Bill 1350 --- which some call the “AirBnB” bill --- restricts local cities and towns from regulating or restricting the use of vacation rentals or short-term rentals within municipal boundaries.

Neighborhoods throughout the Valley, and especially destination communities such as Paradise Valley and Scottsdale, are seeing disruption to their once family friendly residential streets, some say.

While many short-term rentals house families on vacation, or employees on business trips, others are booking parties of 20 oftentimes accompanied by raunchy behavior.

The fever pitch of complaints being received by elected officials spurred the creation of the committee to seek alternative options. The members of the ad hoc committee are:

  • Co-Chair Sen. McGee;
  • Co-Chair Rep. Kavanagh;
  • Sen. Sean Bowie;
  • Sen. David Livingston;
  • Rep. Isela Blanc; and
  • Rep. Travis W. Grantham.

Following the creation and initial meeting of the ad hoc committee, in November two House members --- Rep. Aaron Lieberman and Rep. Blanc --- called for the repeal of SB 1350.

While officials say an outright appeal seems unrealistic, Rep. Kavanagh --- who moonlights as a criminal justice professor at Scottsdale Community College --- told constituents changes will most likely occur.

“You are not at this point going to see a bill that eliminates the short-term rentals and goes back to the old way,” Mr. Kavanagh said.

“The best we can hope for is to get some really meaningful reforms.”

Tax equity reform will be low-hanging fruit for the legislators, Mr. Kavanagh says, while clustering of homes and party homes will be harder to tackle.

“I think we can go a pretty long way in resolving a lot of these problems --- maybe not all of them,” Mr. Kavanagh said.

“I’ll say this now to anyone who’s here who don’t want to see regulation increased, or who listens to this, if you don’t fall behind steps to make reasonable regulations to correct a lot of these abuses in two or three years you will see this ended completely, because that’s what’s happening around the country.”

Following the meeting, Mr. Kavanagh says he sees multiple bills coming forward this Arizona Legislature season, which begins in January.

“There will be several bills --- I, myself, am working on a bill which I can ‘Zero Footprint,’ which will attempt to make the short-term rentals invisible to surrounding homeowners by imposing restrictions on occupancy, requiring noise measuring devices in and outside the units if the owner is not present during the rental,” Mr. Kavanagh explains. “I would also like to prohibit smoking outside, no noise above conversation after 9:30 at night, require off-street parking if it’s available.”

Mr. Kavanagh says another bill he sees coming down the pike include attempting to restrict the state’s preemption of local control to only those who are a person or married couple’s primary or secondary home, and letting local government regulate short-term rental properties that are a true business.

“I think the longer delayed efforts to control the nuisance issue and excessive proliferation issue, the more public outrage will rise and the greater the risk for banning them where local governments don’t want them,” he said.

Community within a tourist destination

Mayor Lane, speaking in front of a full room, says Scottsdale --- along with communities such as the Town of Paradise Valley and Sedona --- is uniquely positioned in its potential to be overrun by short-term rental properties.

“There are certain understandings in neighborhoods as to the type of folks who will be residing in a neighborhood from the point of being a resident and citizen, versus being tourists,” he explained.

“We welcome significantly, and with welcome arms, and try to accommodate them in just about every way possible --- it’s a careful division of things when we start talking about short-term rentals which is essentially lodging.”

Whether looking at short-term rentals as a taxation or clustering problem, Mr. Lane says the accumulation of the properties changes the dynamic of neighborhoods by making single-family homes into commercial enterprises.

“At the beginning of this process, and we tried to comply with the issue, that they would be treated exactly the same as a residential home, and homeowner within it. But that proved to be a difficult thing to try and have compliance with, even with regard to what standards we would hold homeowners to,” Mr. Lane said.

“It was important for us to try and find some different plays as it related to our regulation and our zoning. Zoning for what we use to call short term rentals was in commercial zoning, but it was also a lodging category and taxed as such.”

Mr. Lane says with the current situation, there’s a denigration within zoning being perpetrated upon Arizona cities as the short-term rentals become more commercialized.

“The ask, really, and feelings we have developed through the course of this and even though we’re in the midst of some additional enhancements and our ability to be able to take some measures to be able to control the impact of some of these larger commercial organizations as well as the isolated ones, is in the process right now of being implemented,” Mr. Lane said.

“We are hopeful that will respond to a number of things our residents are expecting from the standpoint of what they’re expecting for maintaining their neighborhoods as neighborhoods. What we’d be looking for going forward --- since we don’t really know --- in a city like Scottsdale, this could be perpetuated, this could grow to significant proportions. It could change the entire complexion of our neighborhoods on the overall.”

Scottsdale now requires all short-term rental property owners to have a contact person on file with the municipality, among other regulations.

“They’re in direct competition with our hotels and resorts, and other lodging issues that relate to our tourists,” Mr. Lane said. “There is some kind of equalization in how we can regulate them, or how they’re subject to regulations from state statutes.”

Mr. Kavanagh asked the Scottsdale mayor his opinion on how to control the total number of short-term rentals within a community, versus concentration within a particular community.

“Because if you were to create a rule that they have to be so many feet from each other, then what you do is spread them all over the community. Whereas they may have been concentrating in the downtown area, you suddenly push them out, and you have all these people outside the downtown area screaming, ‘Look what you did to me,’” Mr. Kavanagh explained.

“If you just say, ‘No more than X-number in a community’ then they will all wind up concentrating in the downtown area where people want to stay. I’ve been thinking about this for months, and I’m having trouble figuring out.”

Mr. Lane says the city has also been grappling with that question as well.

“It’s not an easy issue once this has gotten started as to how you can reverse some of this process,” Mr. Lane said.

“Because of the concern of the takings potentially as it might be described or alleged, as well as the disruption to the marketplace on the overall. There is the added issue of what this does to valuations of neighborhoods since you now may have an operating business --- so that too is measured with any item to try and restrict or reverse the process.”

‘A fake economy’

Ms. Blanc, who represents District 26 bordering portions of Scottsdale, clarified at the end of the meeting that her goal is to protect Arizona residents --- not attack primary and secondary homeowners.

“We have rising housing costs, which is a key problem for American families.

And, all evidence suggests the presence of AirBnB raises local housing costs,” she read from a prepared statement.

“Are we here to legislate for Arizona residents who have, and want to continue to live in Arizona, or are we here to protect the small and largest investment companies that are out of state, or in state, or out of county, who are interested in their bottom line and profitability. Our land and our property should not be up for sale.”

Ms. Blanc says SB 1350 has created benefits, but the costs to the communities and local jurisdictions have been grave.

“Yes, again, it is creating a problem with the cost of housing in this state,” Ms. Blanc said.

“Some people can say well that’s great, because it means we’re doing well economically. I’m sorry --- investment companies are forcing an almost fake economy because of SB 1350, which has raised the cost of homes, it is out pricing the people we legislate for. That’s a problem.”

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